Final Regulations Limit Disclosure of Contributors

| 6/4/2020
Final Regulations Limit Disclosure of Contributors

Final regulations published on May 28 provide that the requirement to report contributor names and addresses on Schedule B (“Schedule of Contributors”) of IRS Form 990, “Return of Organization Exempt From Income Tax,” or Form 990-EZ, ‘‘Short Form Return of Organization Exempt From Income Tax;’’ generally applies to returns filed by only Section 501(c)(3) organizations and Section 527 political organizations. Other tax-exempt organizations, such as Section 501(c)(4) and Section 501(c)(6) organizations, are relieved of reporting contributor names and addresses on the Schedule B, although they still must report the amount of each contribution on the form and maintain contributor names and addresses in their internal books and records. The final regulations adopt proposed regulations published in 2019.

The preamble to the final regulations explains that reporting contributor names and addresses poses a risk of inadvertently disclosing nonpublic information because information on Schedule B generally must be redacted. By not requiring that all tax-exempt organizations include contributor names on the Schedule B, the final regulations reduce the risk of inadvertent disclosure as well as the concern that supporters of certain causes or organizations might face reprisals (such as harassment) or other adverse consequences if their contributor status is made public.

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In response to comments that not requiring disclosure of contributor names would lead to an increase in the flow of money into U.S. elections through Section 501(c)(4) or (c)(6) organizations, the preamble states that Congress has not authorized the IRS to enforce campaign finance laws. In response to comments from state attorneys general, the preamble explains that the information shared with state authorities was authorized to be used only for state tax administration purposes, and, to the extent states determined the burden and cost of collecting that information was warranted, states are free to require reporting of such information at the state’s own expense.

The final regulations also remove the requirement to report the names of contributors who contribute more than $1,000 to organizations described in Section 501(c)(7) (social clubs), 501(c)(8) (fraternal beneficiary societies), or 501(c)(10) (domestic fraternal societies) for a specific charitable purpose.

Among other provisions, the final regulations incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less.

The final regulations apply to annual returns filed after May 28, 2020, but tax-exempt organizations may choose to apply them to returns filed after Sept. 6, 2019.

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Janice Smith
Janice Smith
Managing Director